What does overdue mean in lending?
An amount the lender demanded and the borrower did not pay.
An amount is overdue when it was due on a date the lender fixed and was not paid by that date. The word carries more weight than it looks: it is the trigger for the days-past-due count, the special mention buckets, the classification of the asset, and what gets reported to the credit bureaus.
How is overdue calculated?
From what was DEMANDED and left unpaid — not from what has merely accrued. Interest that has built up but has not yet fallen due is not overdue, and counting it inflates every downstream number. The question is always what the sanction makes due, and when.
Overdue: a worked example
An instalment falls due on 5 April and is unpaid. The account is overdue on 5 April itself, in that night's processing — not on 6 April, and not after a week's grace. If the lender's policy is not to levy a late charge for the first seven days, that is a decision about CHARGING, and it does not delay the account being flagged.
Why does overdue matter?
Because two settings get confused, and confusing them is how a book under-reports stress. Grace on levying a charge is a commercial choice a lender is free to make. Grace on flagging an account is not available, and treating one as the other delays classification, the special mention buckets, and the days-past-due figure sent to the bureaus.
What the regulations say about overdue
The Reserve Bank's November 2021 clarification requires an account to be flagged overdue in the day-end process for the due date itself. Classification begins on day one.
What a lending system has to do about overdue
Two separate settings, never one doing both work. Overdue flagging has no grace; the penal grace period only limits which days are chargeable, and it cannot move classification, the SMA buckets, the NPA date or the bureau figure. One engine computes days past due for every product — products differ by the payments they demand, never by having their own way of counting.
Related terms
- DPD (days past due) — How many days an instalment has been overdue.
- SMA-0, SMA-1, SMA-2 — Special mention accounts — the stages before NPA.
- NPA (non-performing asset) — An account where payment is overdue beyond the prescribed period.
- Penal charges — What a lender may levy for a default — as a charge, not as extra interest.
From the people who wrote this
Run your lending on Lenviq
The section above describes what a lending system has to do about this term. Lenviq does it — on every account, computed at day-end, with the direction it comes from recorded against it.
Lenviq is loan origination, servicing and accounting for NBFCs, built by FastLegal Technologies.